Happy weekend! It’s Apr. 20, 2023. We have three great stories to wrap up the past few weeks in markets, business, and the economy for you and your family.

Here are the highlights:

• A global rally. International stocks are starting to catch up with the U.S.
• Bond yields are rising. Higher for longer.
• Culling of jobs at Tesla. More on America’s biggest layoff of the last five years.

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A Global Rally: International Stocks Are Booming

First, U.S. stocks hit record highs. And now, global stock markets are coming along for the ride. Stock markets across Europe, Japan, and India have all reached record highs in recent weeks — demonstrating the value of having a global portfolio.

• What’s going on? Institutional investors have embraced overseas stocks in recent weeks for their favorable valuations, which has seen stock market benchmarks in Taiwan and Germany outperform U.S. stocks. Other stock markets across Europe and Asia have seen similar strides too, with investors’ confidence in the U.S. economy starting to permeate out into the broader global economy. Much of the gains come as these international and emerging market stocks are perceived to be trading at a “discount” compared to U.S. stocks, which could confer greater rewards for active traders.
• Why are international stocks at a discount? The word “discount” is relative — investors value stocks based on all sorts of factors, including price-to-earnings (P/E) ratio — which measures the price of a stock or index against the earnings generated by the company. One website, [WorldPEratio.com](http://WorldPEratio.comhttps://worldperatio.com/), even provides a useful marker for how fairly valued a country’s stock market is. In a similar way, investors use tools like this to discover opportunities in the market.

Why does it matter for EarlyBird families?

If you feel like you’re missing out on the boom in international stocks, don’t worry! You don’t have to be a big bank to get a piece of the global markets. Every EarlyBird portfolio has an allocation for international stocks, which depends on the level of risk you set when you setup your account. That risk matters, because the riskier you’re willing to go, the more international exposure you’ll have. That’s because international stocks — and emerging market stocks — come with risks that different from U.S. stocks. An allocation to stocks outside the U.S. is one great way we ensure your investment in your child goes the furthest it can.

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Bond Yields Are Climbing As Higher Rates Look Here to Stay

At the start of this year, both Wall Street and Main Street were looking forward to the end of the Federal Reserve’s campaign against inflation — with the celebration expected to come in the form of up to six interest rate cuts. But as we approach the middle of the year, interest rates are still at 5.25-5.50%, levels which have not been seen in decades. And from the looks of it, they might not be coming down soon.

• What’s up with interest rates? Inflation has continued to prove pesky in the U.S. The consumer price index (CPI), one of the country’s most popular measures of inflation, registered a 3.5% year-over-year increase in March. That was more than analysts expected — and cause for concern.
• What does the Fed do now? Federal Reserve members have stressed that the central bank will keep rates high for as long as it took them to return inflation to the bank’s 2% target — which could mean cuts will have to wait until the end of the year.
• How did the market respond? It would be a bit of an understatement to say that the banks were overly optimistic in their expectations for interest rate cuts this year — which they started lowering in the aftermath of the CPI print and comments by Fed members. Some financial institutions even warned about the possibility that rates might go up again!

Why does it matter for EarlyBird families?

Inflation has proven unpleasant for everyday Americans over the last few years, but high rates are now proving to be an even bigger inconvenience in most of the U.S. economy. The 10-year Treasury — a marker that is often used to benchmark loans — rose above 5% for the first time in weeks. And following it upward were mortgage rates, which rose above 7% for the first time this year.

The higher rates are bad for those who need to borrow — which means you might need to put off plans to buy a new car or a house. It’s really bad for those who have been borrowing, too: credit card interest rates have risen, and so have risky variable rate student or personal loans. But on the bright side, those who have cash on hand can take advantage of the higher rates to generate additional income on bonds or in their bank account.

If you’re not sure how to tackle these weird times, consider talking to a financial planner to get an opinion. You’ll be glad you did.

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Culling of Jobs at Tesla Is Worst In Post-Pandemic Era

On Monday, Tesla announced it would cut 14,000 jobs — making it the single-worst layoff event since 2020 according to [layoffs.fyi](http://layoffs.fyihttps://layoffs.fyi/). But despite that jaw-dropping figure, this week’s layoffs were a product of problems at the electric vehicle giant which started long ago.

• Why is Tesla’s problem? With interest rates so high, automakers are pulling out the stops to keep selling vehicles — with common tactics including incentives, credits, and financing at zero interest for a period of time. Tesla was able to keep the economy at bay for awhile by lowering vehicle prices, but it’s now producing many more vehicles than it’s selling.
• Why layoffs? Tech giants like Google, Meta, and Amazon have done multiple rounds of layoffs over the last three years, mostly to reduce headcount, operate with lower costs, and achieve greater efficiency for shareholders. However, Tesla’s layoffs are not like that — the company’s job culling is a direct product of a slowdown in demand for vehicles (especially electric ones.)
• Now what? In tandem with the layoffs, Tesla is looking to focus on a new “Robotaxi” business which can create revenue from the company’s excess inventory of vehicles. However, Tesla’s real turning point might have to wait until 2025 — which is when the company says it expects sales to recover.

Why does it matter for EarlyBird families?

Tesla’s layoffs reflect the reality of high interest rates and their impact on the auto industry and other businesses sensitive to high rates. While this might not affect your job or your colleagues’ roles directly, it does have an impact on the economy. It also can have an impact on your portfolio, even if you don’t directly see it.

Just a few years ago, $TSLA stock was one of the market’s best-performing stocks — but this year, it’s down 39%, making it the worst performer in major indexes like the S&P 500. For comparison, the S&P 500 is up 5.66% over that same period of time! That’s why your EarlyBird portfolio is made up of diversified exchange-traded funds — which offer diversification to hundreds or even thousands of stocks.

What else is up?

• Apple is no longer the world’s largest smartphone seller. iPhone sales were down 10% year-over-year in the latest quarter, allowing competitor Samsung to slip by — and crown itself as the world’s largest handset seller. Other small, cheap firms also gained market share, making Apple’s decline look lonely. Read more about what’s causing it.
• It’s WNBA season… This week, sports fans were treated to the biggest Women’s NBA Draft ever — with stars like Iowa’s Caitlin Clark and LSU’s Angel Reese hearing their names called ahead of what’s expected to be the biggest season for women’s basketball ever. Read to find out when the season starts and how to watch.
• What’s your tax rate? You might not have much control over where you live, but Wallethub’s new study on tax burdens might help steer you towards your next home — see which states have the highest income, property, and sales taxes here.